Digital Services Tax (DST)

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Corporation Tax

Guidance

The digital services tax (DST) seeks to match the amount of tax paid in the UK by digital businesses to the value derived from UK users. It applies to groups that provide a digital services activity.

When it was first introdcued, it was anticipated that DST would be repealed in 2023 and replaced by a multilateral tax of a similar nature (Pillar One of the OECD’s proposed reform of the international corporate tax rules). However, the framework for Pillar One is still under consultation at OECD level. See below at ‘DST ― international aspects’ for further details.

For more detail see Simon’s Taxes D2.801.

Overview of DST

A DST of 2% applies to revenues which are attributable to UK users and arise from digital services activities that fall into the following three categories:

•
a social media service
•
an internet search engine
•
an online marketplace

FA 2020, ss 43, 47

These three activities also include any associated online advertising business in relation to the activities. This means a business which facilitates online advertising

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